Day Of Reckoning At Astra
Most companies try to sweep scandal under the carpet. Not Astra, the giant Swedish drugmaker. Confronted by allegations in a May 13 BUSINESS WEEK cover story of widespread sexual harassment and other abuses at its Astra USA Inc. subsidiary, the company quickly suspended three top executives and launched an internal probe.
Just weeks later, on June 26, the parent company took decisive action: It announced that it had fired Astra USA President and CEO Lars Bildman without paying him any severance. Although Astra won't comment on specific sexual-harassment allegations, Carl-Gustav Johansson, an Astra executive vice-president, says the investigation found that Bildman had "exhibited inappropriate behavior at company functions" and had "abused his power." Another suspended executive, George Roadman, also was shown the door, while a third, Edward Aarons, resigned. A senior executive in Sweden, Anders Lonner, was asked to resign for failing to report the misconduct to superiors, Astra says.
Airing yet more dirty linen, Astra also disclosed that it believes Bildman used company funds to pay for about $2 million worth of personal expenses during the past decade. The bulk of the money supposedly came in the form of renovations done on three Bildman houses by Astra-paid contractors. Bildman allegedly also used company money to pay for lavish vacations and other personal expenses. The U.S. Attorney's office and Massachusetts Revenue Dept. officials have opened probes of the alleged misappropriation of funds, Astra says.
In a statement issued by his attorney, Bildman denied personal involvement in sexual harassment and "categorically denied" the allegations of financial improprieties. He also claimed to have canceled checks proving he paid for the renovations and called the decision to fire him a "cowardly and disloyal" action. Astra says Bildman did pay for some, though not all, of the renovations.
DISPUTED DOCUMENTS. To some degree, demonizing Bildman may serve to deflect blame from Astra itself. Many outsiders believe Bildman could not have run amok for most of his 15 years at the helm of the U.S. unit if he had been properly supervised by the parent company. Johansson hotly disputes that. Bildman was "expert at handling these things within the organization," so the parent company "had no chance" of finding out about the improprieties, he contends.
Indeed, in the weeks before the BUSINESS WEEK story was published, the Astra investigators say, Bildman was trying to hide information from the parent company. He hired a consultant, Lars Magnusson, allegedly to help with the coverup. During at least two weekends, the investigators contend, the two men were seen shredding documents at headquarters. Magnusson, they say, also allegedly spirited away documents that are now the subject of a legal battle between Astra and Bildman. Magnusson did not respond to requests for comment. Bildman's attorney denies any coverup or shredding of documents.
Bildman and Magnusson also allegedly conducted a secret campaign to discredit or deflect the BUSINESS WEEK story before it appeared. Two Astra insiders say they were asked by Magnusson and an executive to secretly tape phone conversations with BUSINESS WEEK. Both say they refused.
SECRET OFFICE. Bildman seemed to suspect that the article was being orchestrated by enemies within Astra, the investigators claim--an idea Bildman's lawyer calls "ridiculous." Whatever the reason, Bildman and Magnusson set up a secret office in a nondescript building not far from Astra USA's headquarters in Westborough, Mass. Staffed with computers and paralegals, the office apparently was intended "to be a nerve center for the effort to prove that BUSINESS WEEK was a tool of Astra USA's enemies," says Francis Carling, a New York lawyer who helped conduct the internal probe.
Is the misconduct at Astra USA really over? Several staffers say a recent national sales meeting was the quietest in memory, with limited alcohol and no dancing. But some insiders contend the housecleaning should have gone much deeper. "The mentality is still there," says one female sales rep. "A lot of people who should still be looked at [by investigators] haven't changed. They're just quiet for the time being."
Maybe so. But experts say that if Astra does any more housecleaning, it's likely to do so more discreetly over the next 6 to 12 months. Meanwhile, it already has done more than most companies in similar circumstances.